Opinion
February 23, 1932.
1. TRUST FUNDS: Duty of Custodian. Under Article 9, Chapter 85, Revised Statutes 1929, it is the duty of a Township Board to select a depository for township funds.
2. ____: ____: Constructive Trustee. The clerk of such township having deposited the township money in a bank of his own selection, the bank having knowledge that it was public money, the money so deposited became a trust fund in the custody of the bank as a constructive trustee.
3. ____: ____: ____: Preference. Since such trust fund added to the assets of the bank the allowance of it to the township as a preference did not decrease the assets available to general creditors.
Appeal from Vernon Circuit Court. — Hon. C.S. Hendricks, Judge.
REVERSED AND REMANDED ( with directions).
Ewing, Ewing Ewing for appellants.
(1) Under the laws of this State it was the duty of the Township Board of Harrison Township to select a depository for funds belonging to said township, and the duty of any bank so selected or receiving said funds to post a bond to faithfully account for any pay over same. Secs. 12184 to 12187, R.S. 1929. (Secs. 9582 to 9585, R.S. 1919.) (2) Any bank in Missouri which receives public funds, belonging to a county, municipal township or school district, without having been selected as such depository in accordance with the provisions of Secs. 12184 to 12187, R.S. 1929, or without having given the bond for said deposit in accordance with said sections, holds same as a trustee for the benefit of the county, township or school district; and relation of bank and depositor does not arise. Upon the failure of said bank, the county, township or school district is entitled to a payment out of the assets of the bank, of the amount of such fund, in preference to payment of general creditors. Huntsville Trust Co. v. Noel, 12 S.W.2d 751; State ex rel. v. Page Bank, 322 Mo. 29; Clearmont School District v. Jackson Bank, 37 S.W.2d 1006; Macon v. Farmers Trust Co., 21 S.W.2d 643; Consolidated School District No. 5 v. Bank of Cabool, 21 S.W.2d 781. (3) The lower court should have found for the appellants for full amount of their claim and should have declared same entitled to preferential payment. (See authorities above cited.)
Hallett Hallett for respondents.
(1) The enactment of depository laws, or laws creating preference of a particular class of public moneys, is a waiver of the common law and statutory priorities as to deposits of public funds in banks, not included by statute within the preference. In re Holland Banking Co. of Springfield, State v. Herr Stores Company, 281 S.W. 708; Special Road District No. 4 v. Cantley, 8 S.W.2d 946; State ex rel. v. Page Bank of St. Louis County, 14 S.W.2d 597; Wright County ex rel. Elk Creek Township v. Farmers Merchants Bank, 30 S.W.2d 32. (2) In the absence of a statute to the contrary, public funds deposited in a bank by an official charged with their custody stand upon no higher ground with respect to the right of a preference than the funds of a private individual deposited by another person to whom they have been entrusted. State ex rel. v. Powell, 67 Mo. 398; Paul v. Draper, 158 Mo. 197; William R. Compton Co. v. Farmers Trust Co., 279 S.W. 748; State ex rel. v. Page Bank of St. Louis County, 14 S.W.2d 597; 3 R.C.L. 555, sec. 182; 7 C.J. 633, sec. 308. (3) When money is deposited in a bank without any agreement or understanding that it shall be kept separate from the other funds of the bank, it becomes a general deposit, and when so deposited it becomes the property of the bank, and the bank and the depositor assume the legal relation of debtor and creditor. Paul v. Draper, 158 Mo. 197; Butcher v. Butler, 134 Mo. App. 69; Ellington v. Cantley 300 S.W. 529; 3 R.C.L. 519, sec. 149. (4) A deposit of money in a bank is presumed to be a general deposit, and the burden of proving otherwise rests on the claimant of a priority or preference. In re North Mo. Trust Co. of Mexico, Mattes v. Cantley, 39 S.W.2d 412; Ellington v. Cantley, 300 S.W. 530; State v. Carson City Savings Bank, 17 Nev. 146, 30 P. 703; Bank of Blackwell v. Dean, 9 Okla. 621, 60 P. 226; Keene v. Collier, 58 Ky. 415; Officer v. Officer, 120 Iowa 389. (5) A constructive trust, or trust ex maleficio, cannot arise in the absence of fraud, actual or constructive, and where a trust of this kind is sought to be enforced fraud must be distinctly alleged and clearly proved. Ferguson v. Robinson, 258 Mo. 129; Anderson v. Crum, 210 S.W. 910; William R. Compton Co. v. Farmers Trust Co., 279 S.W. 748; In re Hunters Bank of New Madrid, Cantley, Commissioner of Finance, v. City of New Madrid, 30 S.W.2d 782; 1 Pomeroy's Equity Jurisprudence (4 Ed.) 189, sec. 155.
The appellants brought this suit in the Circuit Court of Vernon County for the purpose of having declared preferential a deposit made in the Peoples State Bank of Bronaugh of $1611.74, belonging to the plaintiff Harrison Township, the bank at the time of the suit being in charge of defendant Cantley, Commissioner of Finance, and Deputy Commissioner Jerry Wilhite. The case was submitted on the agreed statement of facts which we condense as follows:
Vernon County had adopted the Township Organization law and Harrison Township was a duly organized and existing township in that county. John Hartzfeld, W.R. Henson and Percy Heitz were duly qualified, elected and acting members of the Board of Directors for said Township for the years 1929-1931; C.V. Crouch was duly elected, qualified and acting Township Clerk of Harrison Township for that period. Percy Heitz, trustee as aforesaid, being charged under Section 12188, Revised Statutes 1929, with the custody of the funds of the common school districts located in Harrison Township deposited with the defendant Peoples State Bank of Bronaugh money belonging to the common school districts numbers 81, 82, 83, 84, 86, 103, 116 and 126, located in Harrison Township. At the time the bank closed its doors the amount of the funds of said districts which stood to the credit of Heitz, trustee, was $1611.74.
The Peoples State Bank of Bronaugh was duly organized under the laws of the State, and at the time the suit was brought the Bank had voluntarily placed its assets in the hands of Cantley, Commissioner of Revenue, for administration and winding up of its affairs, under Section 5316, Revised Statutes 1929. Afterwards Cantley appointed Jerry Wilhite as special deputy commissioner and placed him in charge of the bank.
Before said bank was placed in the hands of said Finance Commissioner, the said Jerry Wilhite was Cashier of said bank and as such cashier received the deposits in question, knowing such funds to be public moneys of plaintiffs.
At no time prior to the making of said deposit or any part thereof was the said bank ever selected by the said Township Board or by its Board of Directors as depositor for said funds and the said bank never at any time gave any bond as depositor for said funds in accordance with Article 9, Chapter 85, Revised Statutes 1929.
After the failure and within four months after the bank was placed in the hands of Cantley, the plaintiff filed regularly and properly with said Wilhite a claim for $1611.74, the amount of said deposit, more than six months having elapsed since the giving of notice and the presentation of claims to the said Deputy Commissioner.
The funds of the plaintiff on deposit in said bank were commingled with and are now a part of the assets of the said bank in the hands of Cantley and Wilhite, and at the date the bank was taken over by said Cantley there was in the bank $1700 in cash and sight exchange.
The assets of the Peoples Bank which passed into the hands of defendants Cantley and Wilhite consist of loans, personal and real estate of the value of $74,000, besides the $1700 above mentioned.
Under Article IX, Chapter 85, Revised Statutes 1929, it was the duty of the Township Board of Harrison Township to select a depository for the funds belonging to said Township and secure from the depository a bond faithfully to account for and pay the sums deposited. Heitz, in charge of the fund, had no right to make the deposit in his name as trustee, the bank not having been selected as depository, and when he did take charge of said fund he was charged with a trust to account for it.
When the Peoples State Bank received that fund from Heitz and placed it to his credit it was impressed with the same trust in the hands of the bank. The relation of debtor and creditor did not obtain between the bank and the depositor. The bank took the money, according to the stipulation, knowing the funds to be public moneys belonging to the plaintiffs. The funds being commingled with other assets of the bank had augmented those assets in that amount. [Huntsville Trust Co. v. Noel, 12 S.W.2d 751, l.c. 754; State ex rel. Gentry v. Page Bank, 322 Mo. 29, l.c. 36; Clearmont School District v. Jackson Bank, 37 S.W.2d 1006.]
Since this trust fund added that amount to the assets of the bank the general creditors are in the same position with the preference allowed as if the deposit had not been made. There is nothing to show that anyone deposited or otherwise gave credit to the bank on the strength of that particular asset.
Respondents cite a number of cases none of which we find to be in point against the conclusion reached in the cases cited above. It is argued that a constructive trust or a trust ex maleficio cannot arise in the absence of fraud, and respondent cites cases turning upon the intention of the parties at the time of the transaction. It would not matter what the intentions of the parties were when these deposits were made with the bank; Heitz was a public official charged with certain duties. He could not depart from the letter of the law governing his action by any good intention to create a different relation between himself or his district and the bank than that which the law creates. A constructive trust arises where trust property is received by a party knowing it is impressed with a trust, and that is this case.
The judgment is reversed and the cause remanded with directions to enter judgment for the plaintiff. All concur.